AI Rent-to-Own Agreement

This Rent-to-Own Agreement (the "Agreement") consists of two integrated parts: (1) a residential lease (the "Lease") and (2) an option to purchase (the "Option"). It is made as of [[Agreement Date]] between [[Landlord / Optionor Name]] ("Landlord" or "Optionor") and [[Tenant / Optionee Name(s)]] ("Tenant" or "Optionee").

IMPORTANT DISTINCTION: This Agreement creates a lease-option arrangement. The Tenant has the right (but not the obligation) to purchase the Property during the Option Period. It is not a lease-purchase agreement, under which the Tenant would be obligated to purchase the Property at the end of the term. Tenant may elect not to exercise the Option without penalty beyond forfeiture of the Option Fee and any uncredited amounts as provided herein.

1. Property

Landlord leases to Tenant and grants Tenant an option to purchase the residential real property located at:

[[Property Full Street Address]]

[[City]], [[State]] [[ZIP Code]]

(the "Property"), together with all fixtures, improvements, and appurtenances.

Legal Description: [[Full Legal Description or "See attached Exhibit A"]].

2. Lease Term

The initial Lease term shall be [[Lease Term Length, e.g., twelve (12) months]], commencing on [[Lease Start Date]] and ending on [[Lease End Date]] (the "Lease Term"), unless sooner terminated or extended as provided.

Upon expiration of the Lease Term, if the Option has not been exercised and the parties have not agreed otherwise, the tenancy shall convert to month-to-month on the same terms, subject to termination on proper notice.

3. Rent

Tenant shall pay monthly rent of [[Monthly Rent Amount]], due in advance on the [[Rent Due Day]] of each month, payable to Landlord at [[Payment Address or Instructions]] by [[Payment Methods]].

4. Option Fee (Non-Refundable Consideration)

Upon execution of this Agreement, Tenant shall pay to Landlord a non-refundable option fee of [[Option Fee Amount]] (the "Option Fee").

The Option Fee is paid in consideration for the grant of the Option and is not refundable under any circumstances, including if Tenant elects not to exercise the Option or if this Agreement terminates for any reason other than Landlord's material breach.

The Option Fee is separate from and in addition to any security deposit, which is governed by the Lease terms and applicable law.

5. Rent Credit Toward Purchase Price

A portion of each monthly rent payment shall be credited toward the eventual purchase price if the Option is exercised, as follows:

Rent Credit Amount or Percentage: [[Rent Credit: e.g., twenty-five percent (25%) of each monthly rent payment or a fixed $XXX per month]]

The credit shall be applied only if the Option is timely and validly exercised and closing occurs. No credit shall be applied or refunded if the Option expires, is not exercised, or the Agreement terminates due to Tenant's default.

Landlord shall maintain an accounting of accumulated rent credits and provide a statement to Tenant upon request (at least annually).

6. Purchase Price and Price Determination Mechanism

If Tenant exercises the Option, the purchase price shall be determined as (select one):

☐ Fixed Purchase Price Lock-In: $[[Fixed Purchase Price Amount]]

☐ Appraisal-Based Formula: The fair market value of the Property as determined by a mutually agreed licensed appraiser, less a discount of [[Appraisal Discount Percent]] percent, but in no event less than [[Minimum Purchase Price Floor]] or more than [[Maximum Purchase Price Cap]].

☐ Hybrid: Fixed base of $[[Base Amount]] plus or minus adjustments based on appraisal or agreed formula: [[Describe Hybrid Formula]].

The purchase price mechanism is locked as of the Agreement Date and is not subject to market changes except as expressly provided in the selected option above.

7. Option Exercise Window and Procedure

Tenant may exercise the Option by delivering written notice to Landlord (the "Exercise Notice") during the following window:

Option Period: Beginning on [[Option Start Date or "the first day of the final [[X]] months of the Lease Term"]] and ending on [[Option Expiration Date, e.g., thirty (30) days before Lease End Date or "Lease End Date"]].

The Exercise Notice must:

1. Be in writing and signed by Tenant.

2. State Tenant's unconditional election to purchase.

3. Be delivered by certified mail, overnight courier, or personal delivery to Landlord's address above (or updated address).

4. Be accompanied by an additional non-refundable exercise deposit of [[Exercise Deposit Amount, if any]] (applied to purchase price at closing).

Upon timely exercise, the parties shall proceed to closing within [[Closing Period after Exercise, e.g., forty-five (45) days]] (or such other period as agreed), using standard purchase contract terms to be negotiated in good faith or a form attached as Exhibit B.

If Tenant fails to deliver timely Exercise Notice, the Option expires automatically and all rights hereunder terminate, with no further liability except forfeiture of Option Fee and credits.

8. Security Deposit

Tenant shall pay a security deposit of [[Security Deposit Amount]] upon execution, to be held and returned in accordance with the Lease provisions and applicable law. The security deposit is not part of the Option Fee or purchase price.

9. Maintenance, Repairs, and Responsibilities Split

Landlord Responsibilities (structural and major systems):

• Roof, foundation, exterior walls, and structural components.

• Major systems: HVAC (unless Tenant's misuse), plumbing (main lines), electrical (main service), and septic/well if applicable.

• Compliance with applicable building and housing codes affecting habitability.

Tenant Responsibilities (interior and routine):

• All interior maintenance, painting, flooring, appliances (unless provided by Landlord and defective at start).

• Lawn, landscaping, snow removal, and exterior upkeep as specified: [[Yard / Exterior Responsibility Details]].

• Promptly notify Landlord of any needed structural or system repairs.

• Pay for repairs caused by Tenant's, family, guests, or pets' negligence or misuse.

Tenant shall maintain the Property in good condition, reasonable wear and tear excepted. At end of tenancy or upon purchase, Tenant shall return Property in broom-clean condition.

10. Insurance, Taxes, and Utilities

Tenant shall maintain renter's insurance with liability coverage of at least [[Minimum Liability Coverage]] and provide proof on request. Landlord shall maintain property insurance on the structure.

Tenant shall pay all utilities: [[List: electric, gas, water, sewer, trash, internet, etc.]].

Real property taxes and assessments shall be paid by: [[Landlord / Tenant / Shared - specify split]].

11. Default, Remedies, and Forfeiture

Tenant Default under Lease or Option:

• Failure to pay rent when due (after any applicable cure).

• Breach of any covenant, condition, or obligation.

• Abandonment of the Property.

• Assignment or subletting without consent.

Upon material default, Landlord may:

1. Terminate the Lease and the Option.

2. Retain the Option Fee and all rent credits as liquidated damages (not a penalty).

3. Pursue all remedies available at law or in equity, including eviction and damages.

Landlord Default:

If Landlord materially breaches and fails to cure after notice, Tenant may terminate and receive refund of Option Fee (but not rent credits already applied under the terms).

No waiver of default unless in writing.

12. Memorandum of Option; Recording

Upon execution, the parties shall execute a short-form Memorandum of Option in recordable form (attached as Exhibit C or standard statutory form) describing the Property, the Option Period, and the purchase price mechanism.

Tenant may record the Memorandum at Tenant's expense to provide constructive notice to third parties. Recording does not create any interest beyond the Option granted herein.

Landlord shall cooperate in executing any documents reasonably required for recording.

13. Assignment; Subletting; Death

Tenant may not assign this Agreement or sublet the Property without Landlord's prior written consent. Any attempted assignment is void.

If Tenant dies during the term, the Option may be exercised by Tenant's estate or heirs within the remaining Option Period, subject to the same terms.

14. Notices

All notices shall be in writing and deemed given when personally delivered, or three (3) days after mailing by certified mail, or one (1) business day after overnight courier, to the addresses first set forth above (or as updated in writing).

15. Governing Law; Severability; Entire Agreement

This Agreement shall be governed by the laws of [[Governing State or "the jurisdiction where the Property is located"]].

If any provision is invalid, the remainder shall remain in effect.

This Agreement, including all exhibits, constitutes the entire agreement and supersedes all prior negotiations. Amendments must be signed by both parties.

16. Exhibits

Exhibit A: Legal Description (if not in body)

Exhibit B: Form of Purchase Agreement (if attached)

Exhibit C: Memorandum of Option form

---

SIGNATURES

LANDLORD / OPTIONOR

Signature: ________________________________

Printed Name: [[Landlord / Optionor Full Name]]

Date: [[Date]]

TENANT / OPTIONEE

Signature: ________________________________

Printed Name: [[Tenant / Optionee Full Name]]

Date: [[Date]]

*(Additional signature lines for co-tenants or spouses as needed)*

---

*Template - not professional legal advice. This is a general template for a lease-option (right to purchase) arrangement. It is not a lease-purchase (obligation to buy). Laws governing option fees, rent credits, recording, consumer protections, and usury vary widely by jurisdiction. Option fees may be treated as prepaid rent or security in some states. Consult qualified local legal counsel and a licensed real estate professional before use. All values are [[Token Name]] placeholders.*

*This document distinguishes a true option (Tenant's unilateral right) from a contract for deed or installment sale, which create different legal rights and risks.*